NIRV The Lord and King says, “I will gather the people of Israel together from the nations where they have been scattered. That will prove that I am holy. I will let the nations see it. Then Israel will live in their own land. I gave it to my servant Jacob.
ESV - 25 Thus says the Lord God : When I gather the house of Israel from the peoples among whom they are scattered, and manifest my holiness in them in the sight of the nations, then they shall dwell in their own land that I gave to my servant Jacob.
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I would say that, in the verse cited in the question, the word "holy" is being used not in the sense of being sinless (which it can also mean, depending on the context in which it is employed), but "set apart". God is saying that the power that He would display in gathering His people from the lands where He had previously caused them to be scattered, and in bringing them back into the land that He had originally promised to Abraham and his descendants (his son Isaac, and his grandson Jacob (Israel)), would demonstrate to all other nations that He is set apart, or distinct from, any of the other deities (all of whom are false) that people worship, since such an action would be something that none of those other "gods" could accomplish or bring about..
God can show His holiness in many manners. For example, that God punishes sin shows His holy, righteous nature. We can also see His holiness when we experience his blessings for our obedience.
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